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Shrinkwrap Contract

Both Explicit and Implicit shrinkwrap contracts, explained


Shrinkwrap contracts are legal agreements which you are tricked into "signing" without reading, or you are in effect forced to sign because of the situation. This type of thing is very dodgy. Shrinkwrap contracts can be explicit or implicit. Anyway, why is it called a "Shrinkwrap Contract"? I'll explain by way of an example:

Suppose you bought a software disc in a shop and you took it home, you might reasonably expect to be able to use it. However, upon examining the packaging, you notice the disc is wrapped in shrinkwrap plastic, and on the back it says "You agree to the Contract contained inside this pack. Opening the pack denotes your agreement to the Contract". This would be explicitly a shrinkwrap contract, as you would be unable to read the contract before "agreeing" to it. However, you'd be unable to read the contract to determine whether you agreed or not.

You can see what's wrong, can't you? It's not fair, because morally you should be allowed to read the contract and then decide whether you want to sign it or not.

That's an explicit shrinkwrap contract, where its status of "shrinkwrap" is obvious. More insidious are implicit shrinkwrap contracts, where you have already spent your money and you are then forced to sign a contract in order to avoid the money being wasted. You are allowed to read the contract, but you have not much choice about signing it as you are in effect "under duress" to sign it, or "over a barrel".

Examples of explicit shrinkwrap contracts include some early "free Internet" CDs and other giveaway software which literally had shrink wrap and the contract inside, and something on the outside making a claim that if you opened the box then you agreed to the contract. Some software companies such as Microsoft have been called on the "shrinkwrap software" issue in the early times. Also see What to do if you don't agree to Microsoft Media Player 11. Once you've said "Yes", your machine is damaged and if you want to restore it, then unless you sign the contract, you have to do something clever to "roll back" the updates. It is, in principle, an explicit shrinkwrap contract. (Note that it doesn't need any thin plastic film to be shrinkwrap for the purposes of the definition).

Examples of implicit shrinkwrap contracts include the stuff to do with the Slingbox. The thing itself is good, but the way the contract has you over a barrel, is a problem. Also, OMG has a problem with their affiliate merchants being allowed to put implicit shrinkwrap contracts in place where the affiliate has to go to a lot of trouble before discovering there are "additional terms and conditions".

If you'd asked me a while ago if Adobe had a shrinkwrap contract for their Adobe Acrobat PDF Reader, I'd have said yes, it is a shrinkwrap contract. You had to download Adobe Acrobat in order to read the contract of software conditions which allowed or disallowed things to do with the software. However, this is no longer true because some people have written their own PDF readers, so you can break the deadlock by reading the Adobe contract without having to download the software first.

Also see Clauses in Contracts and Legal Stuff